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Although these banks’ profits were not as high as expected, the performances represent a bright spot in a banking system plagued by non-performing loans (NPLs) and low profits. Specifically, Vietinbank reaped a pre-tax profit of VND8,213 billion ($395 million), which is 9.5 per cent higher than the bank’s pre-tax profit target of VND7,500 billion ($360 million).
The lender’s return on equity (ROE) reached 19.8 per cent and return on asset (ROA ) reached 1.6.
The NPL ratio of VietinBank at the end of 2012 is 1.35 per cent based on Vietnam’s accounting standards, currently the lowest reported level in Vietnam’s banking system. According to the State Bank, as of September 2012, the NPL ratio of the banking system was 8.86 per cent.
BIDV completed its year plan with pre-tax profit of VND4,246 billion ($203.8 million) with an NPL ratio of 2.7 per cent. The lender’s total assets increased by 18.3 per cent, reaching VND497 trillion ($23.89 billion), credit growth rate was 16.2 per cent, equal to VND324 trillion ($15.5 billion).
Vietcombank achieved around 87 per cent of its 2012-plan profit with the pre-tax profit of VND5,706 billion ($274 million) for 2012. The bank’s completion ratio is higher than other commercial banks in the system.
According to Nguyen Huu Nghia, chief inspector of the State Bank, the banking system 2012 profit was low due to high NPLs, the lending rate dropped 2-3 per cent faster than mobilisation rate. ROA and ROE reached 0.58 and 5.89 per cent respectively, just equal to a half of 2011.
“If the NPLs are recognised at true vale and fully provisioned in accordance with banking law, profit of banks will be lower, some banks even face losses,” said Nghia.
BIDV, Vietcombank and VietinBank are all giant state owned banks with high reputation and widespread branch network over the country. VietinBank and Vietcombank are now listed in Ho Chi Minh Stock Exchange (HOSE).
In late 2012, VietinBank successfully sold 20 per cent of its skate to Bank of Tokyo-Mitsubishi UFJ. The total value of the deal was $822 million. In 2011, Mizuho Financial Group already spent $760 million for acquisition of 15 per cent of Vietcombank.
At the end of 2011, BIDV had a successful initial public offering (IPO) as investors snapped up 84.7 million shares at an auction on the Hanoi Stock Exchange (HNX). The bank planed to list on HOSE in 2012 but postponed the plan due to the gloomy and low liquidity stock market.